5.0 out of 5 stars6 Star Authentic World-Changing Book , July 20, 2013

EDIT of 19 AUG 2013: Finish book, adding my new remarks at the top, dropping the preliminary review to the end.EDIT OF 13 AUG 2013: I have a 17 hour aviation trip coming up Friday-Saturday, will try to get the detailed review posted sometime in the days after I reach my destination. I regard this book as one of a half dozen essentials for hybrid public governance in the 21st Century — for participatory panarchy in which the public achieves consensus using collective intelligence methods that leverage ethical evidence-based decision-support that is transparent, truthful, and that produces TRUST as the “glue” for holistic ecologically and socially sound decision-making.

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My last comment first: this book ends beautifully, and I am personally deeply inspired. Rickard Falkvinge has been and will continue to be a change agent, and this book is a form of persistent, ubiquitous sharing of insight that could help accelerate and broaden the emergent public bottom up demands for clarity, diversity, integrity, and sustainability.

One of the better attempts at solving the problems with the copyright monopoly has been Creative Commons. Creative Commons does great work in encouraging creative people to think differently about the copyright monopoly, and about what other people are allowed to do with their work. Unfortunately, there’s one big problem. Here’s an infographic to sum it up:

This is the problem with any law based on the copyright monopoly: it only protects people who can afford to file a lawsuit. If you have the money, if you have the time, and if you have the will to go through a process that often takes years of stress and silliness, then you get to enjoy the benefits of the monopoly. Otherwise, it’s a joke.

Swarm Management: If the last chapter was about the first six to eight days of the swarm’s lifecycle, this chapter is about the first six to eight weeks.

While the effective swarm consists almost entirely of loosely-knit activists, there is a core of people – a scaffolding for the swarm – that requires a more formal organization. It is important to construct this scaffolding carefully, paying attention to known facts about how people work in social groups. Without it, the swarm has no focal point around which it can… well, swarm.

Swarm Economy: Yesterday, news broke that the Expensify service has enabled bitcoin payments. With the rapidly expanding number of businesses accepting bitcoin as payment method, one could think that this was merely another player in the pool of bitcoin’s expanding economy (which just broke the one-billion-USD barrier, by the way). But Expensify is something much more than that.

Let’s first discuss the concept of expense reports to understand Expensify’s important role in the subsurface payments ecosystem. On all companies I’ve worked for lately, you don’t ask the company to buy something you need for your work – it’s just too much paperwork, too much red tape to make it happen. Instead, you get a small budget for discretionary stuff you need to do your job, and you just buy stuff as you need it with your private credit card, send in the receipts to your employer, and get reimbursed on the next paycheck, which arrives before the credit card bill is due.

This system is pervasive and ubiquitous. Sending in receipts for payment like this is known as submitting an expense report. It’s still bureaucracy and red tape and it still sucks, but it sucks considerably less than asking for approval in advance.

Enter Expensify, a service that markets itself straightforwardly as “Expense reports that don’t suck”. I’ve been using Expensify through its development for the past couple of years and have also contributed my use case (frequent travel outside of internet coverage), which led them to implement important new features – meaning, they’re a responsive bunch, too.

Infrastructure: The Pirate Bay is a site that has remained online for ten years come this summer, despite attempts from almost every Ancient-Power-That-Be to shut it down. It has often been said that The Pirate Bay hasn’t evolved much at all in the past five years; I disagree, it has adapted and overcome everything thrown in its path. There may soon come a time when we need to learn from its experiences in resilience just to safeguard freedom of speech.

The Pirate Bay went through a user-interface redesign some time late 2005 or early 2006, when it went multilingual, and has remained fairly constant since then. The only other site in the world’s top 100 that has remained similarly consistent could possibly be Wikipedia; for every other site, it’s a necessity to evolve, modernize, and meet new user demands.

It is not without irony that Hollywood’s nemesis number one in distribution technology hasn’t innovated in user experience in almost ten years, and still outcompetes the copyright industry hands down when it comes to who provides better service.

But I would argue that The Pirate Bay has been remarkably innovative, just not in the user experience field – a lot of other sites are blazing that trail. Rather, The Pirate Bay has been a trailblazer in resilience. After all, a number of bought-and-paid-for or just plain misguided legislatures and courts have tried to eradicate the site, and yet, it still stands untouched.

As the freedom-of-speech wars escalate, we will need to start taking cues from what The Pirate Bay has learned in the art of staying online, and that time may be approaching fast. This was never a war over the copyright monopoly; it was a war over the concept of the letter as such, over the right to communicate in private, over the right to publish and broadcast ideas that somebody else wouldn’t like the world to see or hear.

For this is what we see – the techniques originally used to attempt silencing The Pirate Bay have already come to be used against activists trying to highlight abuse of power, and corporations and others are trying the might-makes-right approach. You have the example with Greenpeace’s protest site being silenced in the exact same way by an oil company, just to take one example among many.

There is the idea among people with money and power that they have the right to control what other people can say about them. Unfortunately, they are starting to enforce that idea with what amounts to mafia tactics, using the threat of courtrooms as their battlefield, and using intimidation to squelch dissent. (The Pirate Bay themselves were victims of law in this very manner.)

As this war on freedom of speech escalates, we would do well to study the methods for staying online that The Pirate Bay has pioneered.

Reflections: After the attempted tolls on bank savings in Cyprus for saving the Euro, a new kind of tolls can be heard in the distance for the currency. The fundamental trust in the currency as a store of value has been broken, according to multiple signs across Europe. Even with the Cypriot parliament backpedaling frantically, the situation appears snowballing – there could be a bank run in two weeks.

. . . . . . . . .

In the past days with the Cypriot bailout measure, these first signs of a currency collapse scenario have materialized. People are now actively seeking to trade off their Euros, no longer trusting them as a store of value. When this has happened in the past to currencies, they have not survived.

Swarm Economy: Bitcoin’s value is at an all-time high again. Following the hype peak and crash in 2011, many seemed to have thought it was just another dotcom fluke. But bitcoin was much more than that, and it has returned with a vengeance – its market cap is now twice what it was in the 2011 peak, and it is nowhere near its potential, which is four orders of magnitude above today’s value.

In this, a lot of people are confused at the fact that bitcoin has climbed 200% since the start of this year alone, and wonder what to make of it. It is currently at $41.50 and climbing fast, and I see a lot of people just looking at the numbers and guessing from charts how things will pan out.

I am seeing guesses of $50, $100, $150, even $1,000. These numbers seem pulled out of thin air from just looking at the charts – nobody seems to have done due diligence from the other direction, from the most fundamental observation of all:

Bitcoin is a transactional currency. As such, it is competing for market share on the transactional currency market.

Talking about bitcoin value is not about happily watching numbers go up and down while having popcorn. This is about identifying a global market, looking at its size and estimating a target market share based on the strengths and weaknesses of the competing product or service under analysis.

When you know the size of the target market, and have an estimate for your projected market share, you can estimate the value of your product or service as a percentage of the value of the total market. I haven’t seen anybody do that for bitcoin.

The total size of the transactional currency market is hard to estimate, but has been pegged at about $60 trillion (the amount of money in circulation worldwide). Seeing how this number is roughly on par with the world’s GDP, it is a reasonable enough number to be in the right ballpark. Based on my four earlier estimates (one, two, three, four), I think it is reasonable that bitcoin captures a 1% to 10% market share of this market.

The low end of 1% would be if it captures international and internet trade. The 10% would be if bitcoin also manages to capture some brick-and-mortar retail trade, which we are already seeing strong signs that it might – operations provide a 3% to 5% extra profit margin on sales when you can cut out the credit card processors, so the incentive to switch is immense: those 3% to 5% cost savings translate to 50% to 100% increased profits, as margins are typically very slim in retail.

Furthermore, some people will undoubtedly invest in bitcoin and keep their portion of bitcoin away from the transactional pool, like all people tend to hoard money if they are able. This decreases the amount of bitcoin that must fulfill the market share, further driving up value for each individual bitcoin. As a rough estimate, let’s assume that only one in four bitcoins is actually used in transactions, and the rest are in some kind of savings or investment plans.

This leads us to a target market cap of 600 billion to 6 trillion USD, to be fulfilled by about 6 million bitcoin, which makes for easy calculations. That means that each bitcoin would be worth $100,000 at the low market cap and $1,000,000 at the high market cap.

In the light of this, present-day projections of $100 that present themselves as “daring and optimistic” actually come across as rather shortsighted and almost dealing with peanuts.

So is the projected market share realistic? Bitcoin certainly has hurdles to overcome – scalability and usability being two of them – but it has done remarkably well in maturing in the two years since I started looking at it. My prediction of a mainstream breakthrough around the year 2019 remains, and it still depends on getting mainstream usability; a target market cap may be reached about a decade after that happens, as a technology typically takes ten years from mainstream breakthrough to maturity.

Now, there are definitely uncertainties in this projection and its assumptions – but it does indicate what kind of ballpark we are talking about.